Lawmakers approve NYS tax legislation

ALBANY -- State lawmakers early Thursday approved a blockbuster agreement to rewrite the state's income-tax brackets and partially roll back the MTA payroll tax, dismissing complaints that the process was handled with secrecy and in too much haste.

The agreement, which the Senate passed 55-0 late Wednesday night, doubles the number of state income-tax brackets, providing, supporters said, "tax fairness" by demarcating a clear line between the wealthy and the middle class.

Couples who earn more than $2 million annually would see their tax rates rise, while couples who earn between $40,000 and $300,000 would see a decline -- effectively pocketing them about $200 to $400 a year. More than 4 million residents would benefit, lawmakers said.

Residents in all other income levels would see no change.

"I think we are doing absolutely fabulous in terms of the middle-income, hardworking taxpayers of the state," said Senate Majority Leader Dean Skelos (R-Rockville Centre).

The deal also includes a fund for large-scale infrastructure projects, one for an urban youth jobs program, and one for upstate communities wracked by floods earlier this year.

The Assembly passed the package of bills early Thursday. According to The Associated Press, the vote was 130-8.

The governor and lawmakers struck the deal just a day earlier.

Gov. Andrew M. Cuomo hailed the tax legislation, saying it would provide the lowest tax rate for middle-class families in more than 50 years.

"This is a fair tax plan that will make a dramatic difference to the people of this state that is long overdue," Cuomo said after the Senate passed the bills.

Fiscal conservatives said the increase on the wealthy amounted to the state's biggest tax hike over the last half century.

Edmund J. McMahon, analyst at the Empire Center, a think tank that supports tax cuts, said Cuomo deserted his prior opposition to taxing the wealthy because of pressure from Occupy Wall Street and Occupy Albany, the latter of which has camped across from the Capitol for weeks. "Just a few weeks ago, [Cuomo] was trying to get the Occupy Albany people arrested," McMahon wrote in his blog. "This week, he hasn't just caved to their main demand -- he's also begun to sound more like them."

Some criticized the fact that Cuomo put the deal together behind closed doors with Skelos and Assembly Speaker Sheldon Silver (D-Manhattan) and forced it to a vote with little scrutiny. The wide-ranging bills were being printed just minutes before rank-and-file legislators were to begin voting. They had been briefed on the bills' details by legislative staffers hours before.

"He said he'd have a more transparent government," Assembly Minority Leader Brian Kolb (R-Canandaigua) said of Cuomo. "This flies in the face of that."

But Kolb and other critics were in the minority. "We have been discussing these changes for years already," said Assemb. Charles Lavine (D-Glen Cove). "I don't think there is anything that will end up in these bills that will be a shock to anyone."

Cuomo reversed his tax position in light of a widening budget gap. Projected earlier at $2 billion, New York now faces a $3.5 billion gap by the end of the fiscal year on March 31. The tax on the wealthy will funnel $1.6 billion toward the deficit while also covering the MTA rollback and the other new, dedicated funds.

Notably, Cuomo and lawmakers had cut school and Medicaid spending nine months ago but promised to raise each by 4 percent in the coming year. With revenues not keeping up with projections, Senate Republicans altered their no-tax-hike stance, saying it was the only way to avoid another round of school cuts.

"We need to do this to help maintain our commitments for next year," said state Sen. John Flanagan (R-East Northport). "If we hadn't, I think there would have been a very strong likelihood that the governor would have proposed" more reductions.

THE DETAILS

Legislation approved by state lawmakers would:

INCOME TAX: Create four new income tax brackets. Couples who earn more than $2 million annually would see their tax rates rise, while couples who earn between $40,000 and $300,000 would see a decline. Residents in all other income levels would see no change.

MTA TAX: Roll back the MTA payroll tax, eliminating it for all businesses with less than $1.25 million in annual payroll and reducing it for those with payrolls of $1.75 million or less.

ALSO: Create a fund for large-scale infrastructure projects, establish an urban-youth jobs program, provide a fund for upstate flood relief.